TREND TRADING how to do it..

[Grey1]

Let the trend be your friend, cut losses fast and stuff like that .. Easily said than done..

How ever there are ways to trade the trend which are less riskier than other methodologies..

Method1,

Buy into stocks where the number of Higher highs are greater during the same time period than any other stock... ( lower lows in case you go short ).. By doing that you are limiting the drawdown and don’t allow the stock to oscillate.. just pure trend..

The Chart below gives you the following info

a) what stock is going through higher high ( or Lower Low)

b) The number of times the stocks has met the above criteria

Example INTU has had 85 new higher highs with little pullback and oscillation and YHOO 122 times lower lows

look at the SPOT , it only has had 12 lower lows during the same time frame ..

method 2)

Plot the regression line through the price … When market is in Positive, Go long when price pullbacks 2SD below the regression line..

You need some kind of a scanner to pick these stocks for you and sooner or later you have to get one if you want to trade the equity market for living .

PS:-- As we go along I will explain my detailed views on Momentum trading and why value trading is more profitable than momentum trading .. This post is for momentum traders.

PS:- method 1 is batter than method 2



regards

 

[Grey1]

This is the chart of INTU against YHOO..

Our concern should be the oscillatory movements of the price which brings about the drawdown.. the number 1 killer in emotion failure..

 

[stevespray]

Is that Radar Screen for Tradestation ? If so what sort of timeframes are you detecting ?

Steve.

 

[Grey1]

Hi ,
This is the alerts coming from realtick platform .. The time frame is 1 minute ..I am sure one could do the same on Tradestation ..


regards

 

[stevespray]

okay - Can I just check the method of operation. What length of time is the system looking back over ? ie SPOT has 13 new lows in what time frame ? I'll see if I can rattle up some code for it.

Steve.

PS What do you term "Value Trading" ?

 

[keano]

I guess 'value trading' has to do with buying a stock which is at a lower price than what the average invester has paid for it. I guess that a stocks VWAP could be used as a bench mark to determine this, although im sure there are other ways which grey will probably be able to explain/correct me.

Keano

p.s good thread grey. Threads like this are why i nominated u 4 MOTM. Who won that anyway??

 

[Grey1]

I have discussed VALUE trading against Momentum trading on the Main BB few weeks back .. I will discuss it in more details as we go along ..

The time frame depends on your pos size .. So if you are trading 100 shares then there wont be much point in trading the momentum in 1 minute chart.. However if you are trading 1000 lots then trading the momentum in 1 minute would make the trade worth while..

regards

PS:-- pls do a search to read about value trading .. it is part of VWAP strategy

 

[Grey1]

KEANO ,

Spot on .. Your definition is exactly what I preach ..

regards

 

[stevespray]

I'm always trying to work on trend systems and reversal systems, its hard work. Just when You think you have something the market dynamic changes and it doesnt work anymore. At the moment I'm doing some work on low risk entry into stocks which are already in a trend. Mind you, establishing trend is a tricky business at times. Recent months make trend following look easy but it certainly isnt.

Steve.

 

[Grey1]

Steve,

great post..

During the course of few weeks , I will discuss issues in trading including the birth of Trend and the path of less resistance ..

What we have to be worry about is the use of late Alerting
strategies such as..

IF ADX > 40 and
Volume Increasing and
RSI is OS and
the rest of it

then GO LONG ..

This is the exact reason why trader's keep losing because by the time the above criteria is fulfilled the momentum has been exhausted and all is left is bits and pieces of noise to attract Fools .. ..

The idea's I will be discussing have already been coded into scanners and are not just an abstract junks applicable to lecture rooms only..

Watch this space..

 

[TheBramble]

You need some kind of a scanner to pick these stocks for you and sooner or later you have to get one if you want to trade the equity market for living .
regards

Is a scanner part of Realtick/TS or something quite seperate?

Any recommendations if it is a standalone product?

 

[Grey1]

Hi,

Is part of realtick..

regards